Vertex, Inc. (NASDAQ:VERX) Q4 2022 Earnings Call Transcript

Steve Enders: Okay. So I guess as you think about like the new top of fuel coming in, in the pipeline, has there been any change in that and a mix there because I think there has been a lot more maybe commentary on this call versus some of the past macro impacts beginning to come in there. So just wondering how you’re seeing new opportunities flowing in, given some of those?

David DeStefano: No, I think I would say it’s still running the traditional way that we have experienced in the past. And again, when I add to it the new motions we have with the sales teams of some of these larger ERPs, that’s giving us good insights into where they are in their dialogues with their customers. And I think I still feel very — that’s why we’re not seeing any material change, and we’re able to drive our guidance up over expectations.

Steve Enders: Okay, perfect. That’s helpful context there. I guess just as we think about the kind of geographic, dealer footprint in Europe has been a good point of growth for a bit now. So just wondering how you’re thinking about Europe going forward from a demand perspective and there’s been anything to call out there in terms of the strength or potential macro impacts in that region?

David DeStefano: Yeah. We had a record year in Europe last year, and I think that team is very well-positioned for 2023. I mean, when you look at what we have the largest platform over there for, again, our customer target customer base is SAP. We have the most differentiated set of capabilities between our chain flow, the LCR-Dixon PLUS Tools that we’ve added, the depth of integrations and now this customer reference-ability, I can’t emphasize that enough, having the largest customers in Europe working with our software has really given us a further differentiation, because it’s a small community of tax players and so they really want to talk to who else you’re doing business with in the region, and that has helped us. And then when I look at some of the new reg changes as they continue to evolve near and real-time reporting, all those things play well in our favor as we look forward in Europe. So I remain confident that the team is going to continue to execute well.

Steve Enders: Okay, perfect. Great to hear. Thanks for taking the question.

Operator: Our next question is from the line of Alex Klar with Raymond James. Please proceed with your question.

Alex Klar: Great. Thanks. I wanted to follow-up on Steve’s question on the international. What are you seeing in terms of overall pipeline makeup from businesses outside of the US? And then specifically, David, you called out a real-time win in terms of in the prepared remarks, how do you feel about your positioning to address the real-time compliance challenges? Thanks.

John Schwab: Yeah. I guess when we think about pipeline and what we’re seeing European companies focused on, clearly, we’ve got a lot of US companies doing business in Europe, but the European companies certainly are focused on — certainly focused on some of the vast solutions that we’ve been offering. I think David called out and mentioned the chain flow, et cetera. But I think more and more as Europe continues to evolve, complexity is coming into its — that needs and those needs are requiring automated solutions to get through. And we’re seeing it start with only the largest companies in Europe, and I think that’s going to continue to proliferate and follow its way down. I don’t know that there’s a whole lot again. I think he talked about chain flow, we talked about those things.

I think they are the key drivers, and they’re a little bit, perhaps a little bit different things that could solve in the US, which perhaps can start a little bit more with sales and use, which are a little more US-centric type things. As far as the real-time reporting, we continue to advance some of the work we’re doing in that area, and we’re being pretty thoughtful about watching health and talking to our customers about what their demands are. We are seeing a growing conversation and opportunity to expand our product portfolio in that area, and it is something we are actively pursuing.

Alex Klar: Okay. Great. And then John, one for you. In terms of kind of the embedded assumptions around hiring for 2023, how are you thinking about growth investments broadly? And any areas you’re going to be pulling back on in the back half of the year?

John Schwab : No. David touched a little bit on it earlier in his remarks. As we think about growth, we do anticipate we’ll be hiring certainly in 2023. We continue to focus on our engineering teams and bringing new products to market and those new products to market require additional investment in personnel. I think that, I mean, that’s very important. And I think as we think about some of the other go-to-market activities that we feel really good about the positioning of our go-to-market teams in terms of the growth that they’ve seen over the last couple of years. So we feel pretty — we feel good about that. But I think we’re going to be looking across the board at different opportunities there. But I think, again, our growth focus continues to be on new product, go-to-market, looking at Europe, just as David has kind of discussed throughout here.

So there are kind of the areas that we’re going to continue to lean in on. Again, we do see some of the internal projects that we’re doing — we’ve been doing for the last year or so start to lighten up, but that’s more internal stuff and outsourced resources there.

Alex Klar: All right. Great. Thank you both.

John Schwab : Great. Thanks, Alex.